Liberia: Article IV Consultation

Abstract

The Buffie et al. (2012) model was used to examine the macroeconomic impact of scaling up public investment in Liberia. The simulations presented in the report captured some of the costs and benefits of three potential investment strategies. The more ambitious investment program yielded the larger growth dividend over the medium term, but at the risk of unsustainable debt dynamics. Other results showed that a combination of increased public investment and efficiency of capital spending could lead to a 1 percentage point increase in the average annual growth rate of real per capita income over ten years. (See Box 4 and supplement 1 in the report)